Assume that on January 1, 2009, a parent company acquired a 90% interest in a subsidiarys voting common stock. On the date of acquisition, the fair value of the subsidiarys net assets equaled their reported book values. On January 1, 2011, the subsidiary purchased a building for $480,000. The building has a useful life of 10 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2013, the subsidiary sold the building to the parent for $420,000. The parent estimated that the building had an 8 year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. The parents stand-alone income (i.e., net income before recording any adjustments related to pre-consolidation investment accounting) is $500,000. The subsidiarys recorded net income is $100,000.

Noncontrolling interest and intercompany sale of depreciable assets Consolidated income attributable to noncontrolling interest:

$6,400

$6,850

$10,000